50 million ecommerce shoppers drop out after first purchase

The findings explain why India’s online shopping is not keeping pace with its internet expansion.

Among 50 million active online shoppers in India, women are almost half the number.

NEW DELHI: Here’s the 50 million conundrum for India’s ecommerce — regular online shoppers in India are around 50 million, but almost the same number of Indians have stopped online shopping in the last 12 months. The online shopping dropouts and new shoppers coming online could transact up to $50 billion over the next five years.

This twist in India’s internet growth story comes from a ninemonth-long research conducted by Google, consultants Bain & Company and philanthropic venture fund Omidyar Network.

Their data shows 54 million users stopped online transaction after their first purchase in the last year. This group comprises mostly first time internet users from lower income groups who are more comfortable with vernacular languages than English.

The near 1:1 ratio between active digital shoppers and digital dropouts presents a huge challenge, say experts and stakeholders. Vikas Agnihotri, country director, sales, Google India says, “Optimistically, it’s a $50 billion of realisable ecommerce opportunity if we just get 50% of the 50 million back and get 40-50% of the next wave of 500 million internet users to transact online.”

Roopa Kudva, managing director, Omidyar Network India adds, “it will be a long journey to get them back. We can’t do version 1.0 of ecommerce for them.”

The research shows many reasons why India’s online shopping is not keeping pace with its internet expansion. Kudva says many of these new users aren’t even familiar with a shopping cart icon because of their unfamiliarity with the modern physical retail.

Omidyar’s investment partner Siddharth Nautiyal says user interface for sites and apps is mostly in English and sometimes Hindi. This rules out a very large number of new internet users from easily acclimatising themselves with online shopping.

The touch and feel experience of internet shopping, the research shows, is a crucial explanation for why so many Indians became digital dropouts. According to Agnihotri, it might take three to five years to get these internet users back to regular online shopping.

“Only 28% Indian are connected to internet. Making money is a challenge for internet companies,” says Rajan Anandan, vice president, Google, South East Asia and India.

Apran Sheth, partner Bain & Company adds, “there are people who are consuming content on their mobile devices, but haven’t crossed the barrier to make an actual transaction online as yet.”

There’s also the trust factor. “A customer sitting in say, Bareilly is concerned whether he will get a refund,” says Omidyar’s Nautiyal.

“It’s a big task for the ecommerce industry to convert a complaint into an opportunity and build trust,” says Google’s Agnihotri.

And social prejudices play a part, too. Bain’s Sheth says there are prejudices in group of first-time internet users that don’t allow women to access internet, cutting out a big potential group of shoppers.

Among 50 million active online shoppers in India, women are almost half the number.

“Staying online is a challenge for the next 0.5 billion Indian internet users.

They are different from the early adopters in income levels, education and social context. In remote and rural areas men deny women access to internet as they believe it’s a bad influence,” says Kudva.

There are models India’s ecommerce companies can follow, researchers say.

Bain’s Sheth cites the case of IFFCO-Kisan, a government initiative that provides relevant crop and weather related information to farmers in 11 local languages. He also cites Pratilipi, an online platform for connecting readers and writers in vernacular languages.

Researchers said ecommerce will need to find new ways to connect with Bharat — the opportunity cost is $50 billion and growing.